Sir,
I have taken a unsecured loan of Rs. 5,00,000/= @ 12% on which 60,000/= yearly interest is payable.
Can I pay the creditor a sum of Rs, 5,000/= every month in cash and yet the expenditure shall not be disallowed.
Thanks
Pramod
1 Replies
Sonam Bidasaria
(CA)
(770 Points)
Replied 20 March 2012
Yes. Interest not exceeding Rs. 20,000 can be paid in cash and the same will be allowed. Provided, from the second month, you will have to deduct tax under Sec 194A.
1st month = Cash payment Rs. 5,000
2nd month = cash payment Rs. 4000 (After deducting TDS on Interest paid in previous month also)
3rd - 12th Month = Rs. 5500 (Net of TDS)
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